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Urgent accounts query

manik (ca in practice) (420 Points)

16 February 2012

we are a construction co, we had purchased flexboard, denoting safety instructions at site , please advice as to under which head it should be booked

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12 Replies

Jitendra Vyas (Commercial Officer) (178 Points)
Replied 16 February 2012

Fixed Assets. if for long time use at site.

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Ashish (XYZ) (86 Points)
Replied 16 February 2012

This should be capitalied and shown under Fixed Assets

manik (ca in practice) (420 Points)
Replied 16 February 2012

but these are made of plastic sheets , suspectable to wear and tear, how could these be capitalised and its cost is rs.5500

Phalgun (Audit Manager) (327 Points)
Replied 16 February 2012

under the Income tax act, there is a provision stating that a fixed asset worth Rs.5000 or less be depreciated @ 100%. since this is small amount u can show it as direct expense.

Jitesh Golani (student) (60 Points)
Replied 16 February 2012

Agree with Falgun, even if it above Rs. 5000 still you can treat it is revenue expenditure...

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Anshul (CA Final Aspirant) (42 Points)
Replied 16 February 2012

Agreed.....It shall be treated as a revenue expenditure only. Moresoever , a Flex board would also not have a long life...

khushal (ACA; CS Professional Gr. II & IV Cleared; Pursuing ACCA UK & Bcom Graduate) (63 Points)
Replied 16 February 2012

Well,,it depends on the company whether to capitalise this as an Asset & take depriciation on that asset or to treat as an revenue expenditure & write off full amt in the current year itself.

(Guest)

Originally posted by : Phalgun
	under the Income tax act, there is a provision stating that a fixed asset worth Rs.5000 or less be depreciated @ 100%. since this is small amount u can show it as direct expense.

Fully Agree with this .

shanavas.M.K (CA Aspirant) (129 Points)
Replied 17 February 2012

Its a direct expenses.

Tony John (Chartered Accountant) (6085 Points)
Replied 17 February 2012

Originally posted by : Jitesh Golani
	Agree with Falgun, even if it above Rs. 5000 still you can treat it is revenue expenditure...

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Dhanabal Ramasamy (CHARTERED ACCOUNTANT) (105 Points)
Replied 18 February 2012

Dear Friends..

Items below Rs.5000/- can be fully allowed as depreciation as per Companies Act and not in Income Tax Act.

In this case,its revenue expenditure. Its not asset though it serve long year. We might have heard or studied about "deffered revenue expenditure" and it belongs to such category. For example take purchase of stationery like File, Folder.. is it asset or Revenue Expenditure? Like that its a revenue expenditure and to be expensed in same year.